National Consumer Disputes Redressal
The Gauhati Co-Operative Urban Bank ... vs Santosh Kumar Tewari And Ors. on 29 May, 1997
Equivalent citations: (1997)5COMPLJ607(NCDRC)
ORDER S.S. Chadha, Member (J)
1. These first appeals by the Gauhati Co-operative Urban Bank Ltd. and its Branch Manager are directed against the common order, dated 16.10.1993 passed by the Assam State Commission at Gauhati disposing of the batch of complaints and issuing directions for investigation of the claims of genuine subscribers in whose names account payee refund vouchers were issued and encashed be fictitious persons by opening new accounts with opposite parties Nos. 3 to 9 who realised the proceeds of refund vouchers and made payments to fictitious persons.
2. The facts hereinafter noticed are not in dispute. The complainants applied in the prescribed form for allotment of equity shares of Rs. 10 each of Tata Elaxi (I) Ltd. -- opposite party No. 1 before the State Commission, through Tata Consultancy Services Unit, Tata Elaxi (I) Ltd., opposite party No. 2 before the State Commission in pursuance of an advertisement made calling for such application for shares. The number of equity shares proposed to be purchased and the amounts paid by each of the complainants are separately given and as per list enclosed with the order of the State Commission. The complainants were not allotted the shares and on enquiry from the first opposite party, they were informed that account payee refund vouchers were issued to the applicants who were not allotted the shares and these vouchers were encashed by collection by various branches of the banks who are opposite parties 3 to 9 before the State Commission.
3. The complainants alleged in the complaint that they were surprised and shocked to receive letters from the first opposite party, that the refund vouchers were sent to the respective complainants individually through respective bankers as named in the letter of the company and a photo copy of the refund order indicating the name of the bank and its branch, through which it was encashed, was sent to the respective complainants. It was categorically stated in the complaint that none of the complainants ever received the refund orders from the first opposite party and hence the question of encashment thereof by any of the complainants did not arise at all. The complainants made allegations against the first opposite party that they intentionally and with obvious motivation did not send the respective refund orders by registered post. The allegations against the banks opposite parties Nos. 3 to 9 before the State Commission including the appellant herein were that the bank are equally liable and responsible for laches and negligence for having caused encashment of respective refund orders which were account payee and crossed and as per banking norms, a crossed negotiable instrument could not be encashed and had to be deposited in the account of the person named therein. The charge was that in these cases account payee/non-negotiable refund orders were allowed to be encashed by third parties who were allowed to open accounts in fictitious names. The complainants prayed for refund of the amount of each refund order together with interest and also claimed Rs. 2,000 for mental agony, credit injuries, cost and expenses in respect of each complaint
4. On being noticed, the opposite parties denied the allegations made by the complainant and it was pleaded that the petition filed jointly by the complainants is not maintainable, that all the individual 30 persons cannot file a joint complaint for compensation, that the complaint petition is bad for misjoinder of the parties, that the complainants are not entitled to file the petition as per Section 17 of the Consumer Protection Act, 1986, that the State Commission has no jurisdiction to entertain the complaint filed by the complainants as the complainants are not consumers qua the banks opposite parties Nos. 3 to 9. On merits, it was pleaded that as per regulation and instructions, any person can open an account subject to fulfilment of the simple condition of the identification by any account holder of the bank, that if any person opens an account and deposits its refund order, the bank has no scope to suspect, the identity of the depositor that he is not the real owner of the refund order and that there was no negligence or laches on the part of the bank and the complaints filed by the complainants are liable, to be dismissed.
5. the State Commission after noticing the respective versions of the parties came to the finding that the account payee vouchers in the name of the complainants were encashed at different branches at Gauhati of the banks of the opposite parties Nos. 3 to 9 and according to the complainants, these account payee vouchers in their names were encashed by fictitious persons. Reliance was placed on the letter of the Reserve Bank of India, dated 7, August, 1993, relating to the fraudulent encashment of the refund orders. The investigations made by the Reserve Bank of India revealed that in most of the cases, the branch officials of the opposite parties banks had not strictly followed guidelines/instructions for opening new account and which facilitated fraudulent encashment of refund orders by unscrupulous persons. The Reserve Bank of India advised that as per the existing instructions, the banks are expected to reimburse the genuine investors /account holders, if the bona fides of the claimants are established.
6. The State Commission relied upon this letter to hold that the refund vouchers were deposited and the banks made payments to fictitious persons. The State Commission directed that the genuine subscribers in whose names refund vouchers were issued are entitled to get back the amount from the banks as there was negligence on the part of the banks as the directions of the Reserve Bank of India were violated. The State Commission granted the reliefs to the following effect:
1. Each applicant before us shall apply to the collecting bank from where a/c payee refund vouchers were encashed for reimbursement. The name of such bank, who are responsible for reimbursement are in the enclosed Annexure.
2. The respective banks, shall make an enquiry within a period of one month, and if it is found that vouchers were encashed by fictitious persons, the applicants shall be reimbursed. In other words, they shall be paid the amount of the refund vouchers within a period of one month.
3. In case of any dispute between any petitioner and any bank, the bank shall, immediately inform the Reserve Bank of India, Guwahati Branch, and the Reserve Bank of India shall depute a responsible officer to make an enquiry within 15 days and shall pass appropriate orders. The order of the officer, of the Reserve Bank of India shall be binding on the banks.
4. In the event, the amount is not refunded by the bank, it shall carry interest at the rate of 12% per annum from today.
5. The names of the petitioners and number of shares applied for and the amount paid and also the names of the banks showing their branches from where 110 a/c payee refund vouchers were encashed are enclosed, separately in the 1st annexed to this judgment.
7. We have heard counsel for the parties and have gone through the records. Shri Jatinder Sharma, Senior Advocate, for the appellants, urged that the State Commission failed to decide all the questions raised by the appellant, namely, jurisdiction of the State Commission for deciding the case of the complainants, the maintainability of the complaint petition, multifariousness and the question whether complainants are consumers or not. Great emphasis was laid by the counsel that the complainants are not consumers as defined under Section 2(1)(d)(ii) of the Consumer Protection Act in relation to the appellant as there is no hiring of service for consideration. There is great force in this submission. The case of the complainants in the nutshell is that the account payee vouchers in the name[s] of the complainants were encashed at different branches of opposite parties 3 to 9 by fictitious persons fraudulently and not that the complainants had hired the services of the appellants and other banks for consideration. Section 2(1)(d)(ii) defines consumer to mean any person who hires or avails of any services for consideration which has been paid or promised or partly paid or partly promised, or under any system of deferred payment and includes any beneficiary of such service other than the person who hires or avails of service for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned persons. Hiring of services for consideration is a condition precedent to make a person a consumer. The complainants had to establish the hiring of the services for consideration. In fact, no evidence was led by the complained (sic) the State Commission that the services of the appellant or other banks were hired by the complainants for consideration. If there is any hiring of service of the banks, it is by the unscrupulous persons who had opened accounts in fictitious names and fraudulently encashed the refund vouchers. There is no privity of contract of hiring of service for consideration by the complainants with the banks in these transactions. The complainants in our view are not consumers as defined under the Consumer Protection Act, and the State Commission had no jurisdiction to entertain the complaints and grant the reliefs.
8. Accordingly, the appeal is allowed, the impugned order of the State Commission, dated 16.10.93 is set aside and the complaints are dismissed. It will be open to the complainants to seek their remedies in an appropriate court and any observations made by this Commission shall not prejudice their rights in doing so. In the circumstances, the parties are left to bear their own costs throughout.